Related topics

Thousands of ‘Discouraged Workers’ Part of Hidden Unemployment

February 5, 1990

WASHINGTON (AP) _ Thousands of Americans who have stopped looking for work because they are discouraged are part of a ″hidden unemployment″ problem that some analysts say boosts the real jobless rate to around 8 percent.

The Labor Department reported Friday that the nation’s unemployment rate, or the number of Americans actively seeking work, held steady in January at 5.3 percent for the eighth straight month.

So-called discouraged workers, however, are not included in the department’s monthly unemployment figure, an exclusion some analysts consider misleading.

Those experts also think a percentage of ″under-employed″ workers, or those who hold part-time jobs but would rather be full-time, should be included to give a more accurate picture of the nation’s jobless problem.

″We think including those numbers would give a truer picture of what’s going on,″ said Candice Johnson, a spokeswoman for the 14.2 million-member AFL-CIO.

″The unemployment rate hides a lot of things and masks many of the problems with our economy. We need to be taking a broader look,″ said Barry Bluestone, a political economist at the University of Massachusetts.

Because the number of discouraged workers tends to rise and fall with economic swings, some economists believe those people - or at least some of them - should be counted in the unemployment figures.

There were about 827,000 discouraged workers in the final quarter of 1989 - the last period for which figures are available - while 1.8 million Americans had given up on looking for work at the height of the 1982 recession.

″The number increases during recessions and decreases during good times. If you believe a growth in the number of discouraged workers means an increase in unemployment, then it should be counted,″ said Sar Levitan, an economist at George Washington University.

Discouraged workers have been overlooked as the nation enjoys a relatively low and steady jobless rate, according to some analysts.

″There’s been relatively low unemployment for the past few years, and those left behind are being forgotten. By and large, we pay very little attention to them,″ Levitan said.

In the Labor Department’s unemployment report for December, a quarterly report showed that had all discouraged workers been counted, along with half of the involuntary part-timers, the unemployment rate would have been 7.9 percent.

However, others contend the Labor Department includes too many people when calculating the official unemployment level, such as students and those who have been jobless only for a few weeks.

″There are as many people who think we overestimate as there are those who think we underestimate,″ said Deborah Klein, an economist with the department’s Bureau of Labor Statistics.

Some discouraged workers have lacked jobs in months and therefore should not be considered part of the workforce, Ms. Klein said.

″It’s a state of mind. Two people in the same situation might respond differently,″ she said.

The argument over what information to include has been going on since measurements for unemployment were defined in the 1940s, Ms. Klein said. Over the years, outside commissions have studied and refined the definitions. Congress does not control the guidelines.

″It is not willy-nilly, though it is not mandated. We would not feel comfortable with wholesale changes. The definition is one that’s stood the test of time,″ Ms. Klein said.

Levitan headed the last commission to study the issue and recommended in 1979 that further review be given to including a portion of discouraged workers in the official unemployment figure. When the Reagan administration took office, officials cited a lack of resources in turning down the request, Levitan said.

About half of those who classify themselves as discouraged workers should be counted as unemployed, Levitan said, which would still put the unemployment figure above the government’s official rate.

Bluestone and a colleague, labor historian Jim Green, said many of the discouraged workers probably lost high-paying factory jobs in the recent manufacturing slump and cannot bring themselves to accept lower wages.

″If I were in that situation, I would probably also say, ’Geez. What’s the point? I’m working only to be poor,‴ Green said. ″It used to be that if you worked hard and saved your money, things would improve. It’s not necessarily like that anymore.″

Update hourly